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Hancock Whitney (HWC) Q1 Earnings Beat on Provision Benefit
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Hancock Whitney Corporation’s (HWC - Free Report) first-quarter 2022 earnings of $1.40 per share handily outpaced the Zacks Consensus Estimate of $1.32. The bottom line improved 15.7% from the prior-year quarter.
Results benefited from a fall in non-interest expenses, a slight rise in loan balance and provision benefit. However, a decline in net interest income, which reflected relatively lower interest rates and reduced non-interest income, were the undermining factors.
Net income came in at $123.5 million, up 15.2% year over year.
Revenues and Expenses Fall
Total revenues were $311.9 million, down 3% year over year. The top line also missed the Zacks Consensus Estimate of $314.5 million.
Net interest income (on a tax-equivalent basis) declined 2.7% to $231 million. Net interest margin (NIM) was 2.81%, contracting 28 basis points (bps).
Non-interest income was $83.4 million, declining 4.2%. A drastic fall in secondary mortgage market operations fees mainly led to this decrease.
Total non-interest expenses fell 6.8% to $179.9 million. The decline was mainly attributable to lower personnel expenses.
Efficiency ratio decreased to 56.03% from 58.12% in the year-ago quarter. A decline in efficiency ratio indicates an improvement in profitability.
As of Mar 31, 2022, total loans were $21.3 billion, up almost 1% from the prior-quarter end. Total deposits were relatively stable at $30.5 billion.
Credit Quality Improves
Provision for loan losses was a benefit of $22.5 million compared with a benefit of $4.9 million in the prior-year quarter. Net charge-offs (annualized) were 0.01% of average total loans, down 33 bps.
Total non-performing assets plunged 58.4% from the prior-year quarter to $51.7 million.
Capital & Profitability Ratios Improve
As of Mar 31, 2022, Tier 1 leverage ratio was 8.38%, up from 7.89% at the end of the year-earlier quarter. Common equity Tier 1 ratio was 11.12%, up from 11% as of Mar 31, 2021.
At the end of the first quarter, return on average assets was 1.39%, up from the year-ago period’s 1.28%. Return on average common equity was 13.88%, up from 12.63% in the prior-year quarter.
Share Repurchase Update
During the quarter under review, Hancock Whitney repurchased 350,000 shares at an average price of $52.79 per share.
2022 Outlook
Management projects core loans to grow 6-8%. The company expects deposits to be flat to slightly down.
NIM is expected to continue widening on the back of expected future rate hikes.
Secondary mortgage fees are anticipated to continue declining as rates rise, which will lead to a slowdown in refinancing activities.
Our Take
Supported by a solid balance-sheet position and an improving credit quality, Hancock Whitney remains well poised for growth. With expectations of higher interest rates, the company is likely to witness growth in interest income in the quarters ahead. Yet, dismal performance of the mortgage business is a concern.
Hancock Whitney Corporation Price, Consensus and EPS Surprise
Zions Bancorporation (ZION - Free Report) is scheduled to release first-quarter 2022 results on Apr 25.
Over the past 30 days, the Zacks Consensus Estimate for Zions Bancorporation’s quarterly earnings has moved 1.8% upward to $1.15. This implies a 39.5% decrease from the prior-year quarter.
Prosperity Bancshares (PB - Free Report) is scheduled to release quarterly numbers on Apr 27.
Over the past 30 days, the Zacks Consensus Estimate for Prosperity Bancshares’ quarterly earnings has moved 1% lower to $1.29. This suggests a 10.4% decrease from the prior-year quarter.
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Hancock Whitney (HWC) Q1 Earnings Beat on Provision Benefit
Hancock Whitney Corporation’s (HWC - Free Report) first-quarter 2022 earnings of $1.40 per share handily outpaced the Zacks Consensus Estimate of $1.32. The bottom line improved 15.7% from the prior-year quarter.
Results benefited from a fall in non-interest expenses, a slight rise in loan balance and provision benefit. However, a decline in net interest income, which reflected relatively lower interest rates and reduced non-interest income, were the undermining factors.
Net income came in at $123.5 million, up 15.2% year over year.
Revenues and Expenses Fall
Total revenues were $311.9 million, down 3% year over year. The top line also missed the Zacks Consensus Estimate of $314.5 million.
Net interest income (on a tax-equivalent basis) declined 2.7% to $231 million. Net interest margin (NIM) was 2.81%, contracting 28 basis points (bps).
Non-interest income was $83.4 million, declining 4.2%. A drastic fall in secondary mortgage market operations fees mainly led to this decrease.
Total non-interest expenses fell 6.8% to $179.9 million. The decline was mainly attributable to lower personnel expenses.
Efficiency ratio decreased to 56.03% from 58.12% in the year-ago quarter. A decline in efficiency ratio indicates an improvement in profitability.
As of Mar 31, 2022, total loans were $21.3 billion, up almost 1% from the prior-quarter end. Total deposits were relatively stable at $30.5 billion.
Credit Quality Improves
Provision for loan losses was a benefit of $22.5 million compared with a benefit of $4.9 million in the prior-year quarter. Net charge-offs (annualized) were 0.01% of average total loans, down 33 bps.
Total non-performing assets plunged 58.4% from the prior-year quarter to $51.7 million.
Capital & Profitability Ratios Improve
As of Mar 31, 2022, Tier 1 leverage ratio was 8.38%, up from 7.89% at the end of the year-earlier quarter. Common equity Tier 1 ratio was 11.12%, up from 11% as of Mar 31, 2021.
At the end of the first quarter, return on average assets was 1.39%, up from the year-ago period’s 1.28%. Return on average common equity was 13.88%, up from 12.63% in the prior-year quarter.
Share Repurchase Update
During the quarter under review, Hancock Whitney repurchased 350,000 shares at an average price of $52.79 per share.
2022 Outlook
Management projects core loans to grow 6-8%. The company expects deposits to be flat to slightly down.
NIM is expected to continue widening on the back of expected future rate hikes.
Secondary mortgage fees are anticipated to continue declining as rates rise, which will lead to a slowdown in refinancing activities.
Our Take
Supported by a solid balance-sheet position and an improving credit quality, Hancock Whitney remains well poised for growth. With expectations of higher interest rates, the company is likely to witness growth in interest income in the quarters ahead. Yet, dismal performance of the mortgage business is a concern.
Hancock Whitney Corporation Price, Consensus and EPS Surprise
Hancock Whitney Corporation price-consensus-eps-surprise-chart | Hancock Whitney Corporation Quote
Currently, Hancock Whitney carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Release Schedule of Other Banks
Zions Bancorporation (ZION - Free Report) is scheduled to release first-quarter 2022 results on Apr 25.
Over the past 30 days, the Zacks Consensus Estimate for Zions Bancorporation’s quarterly earnings has moved 1.8% upward to $1.15. This implies a 39.5% decrease from the prior-year quarter.
Prosperity Bancshares (PB - Free Report) is scheduled to release quarterly numbers on Apr 27.
Over the past 30 days, the Zacks Consensus Estimate for Prosperity Bancshares’ quarterly earnings has moved 1% lower to $1.29. This suggests a 10.4% decrease from the prior-year quarter.